No Clause Can Save a Bad Setup

You’re asking exactly the right question at exactly the right time, before this becomes a problem rather than after. A lot of capable VAs are working through the same thing right now, so let’s get you a clear answer.

Here’s what’s actually changed. Since 26 Aug 2024, the law looks at the whole of your working relationship, not just what your contract calls it. Sham contracting has more teeth. Many contractors can now challenge unfair contract terms (eligibility depends on income). And the consequences of getting it wrong, unpaid super and penalties included, are real, which is why a careful client is right to raise it. (Riz from Foundd Legal covers the specifics further down, so we’ll keep the legalese brief up here.)

That’s a question you have real power over, with not one fix but three genuine levers to pull.

• Path A: Tighten the relationship so it genuinely looks and works like contracting.
• Path B: Review your structure and check whether sole trader, company or something else suits you best.
• Path C: Consider remote employment as one honest option in your mix, for the right gig.

We’ll walk through all three, with backup. We’ve brought in two of our favourite experts for this one: Riz McDonald of Foundd Legal on the contract side, and Casey McQuillan of Bullet Business Services on the structuring and tax side. Hearing it from a lawyer and an accountant means what follows is well grounded, but take it as insight to learn from, not advice for your situation.

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Path A: Tighten the relationship

If a clause can’t make a relationship into something it isn’t, then the first and strongest lever is to make sure the relationship genuinely is contracting, and to understand, for yourself, whether it is. For that, seek professional advice for your personal situation. The good news: chances are you’re already well on your way. This is less about overhauling how you work and more about recognising what already makes you a contractor, tidying the bits that are fuzzy, and being able to say it out loud with confidence.

Here are the markers the law actually looks at. Read them two ways at once: as a quiet self-audit (does my setup stack up?), and as language for talking confidently about how you work, if a client raises it.

A quick but important note: only ever say these if they’re genuinely true of how you work. They’re not lines to perform; they’re ways to describe a setup you actually have. If one doesn’t fit yet, that’s a signal that you may want to change how you work, not what you say.

1. Control: you decide how and when the work gets done.
Your client tells you the what and the deadline; the how, and when you actually do it, are yours. If you’re starting each day waiting to be told what to work on, that’s worth a look.
You could say: “You tell me what you need and the deadline. How and when I get there is up to me.”

2. Results, not hours: you’re engaged for an outcome.
The closer your work is to “deliver this” rather than “be available for X hours”, the more it reads as contracting. Scoping work as projects or deliverables helps. It’s a helpful signal, not a magic one: a court weighs it alongside everything else and won’t treat “you hired me for a result” as settling the question on its own.
You could say: “You’re paying me for the outcome, not for a set block of hours.”

5. You carry the risk: your work is your responsibility.
A contractor stands behind their work. If something isn’t right, you put it right, at your own cost and on your own time, a genuine business risk an employee doesn’t carry, which is part of what professional indemnity cover is there for.
You could say: “If something I deliver misses the mark, I fix it at my cost. That’s what my insurance is there for.”

6. You’re building your business, not theirs: you’re a supplier, not a fixture.
A contractor runs their own business and serves clients; an employee is absorbed into someone else’s. The more you look like part of the furniture, one client, their email address, a title on their org chart, the more it reads as employment. Your own brand, your own other clients (or the real freedom to take them), your own business identity, all point the right way.
You could say: “I’m running my own business and you’re one of my clients, which keeps this clean for both of us.”

None of these has to be perfect on its own. The law weighs them together and looks at the whole picture, so one wobble won’t sink you. But the more you can tick honestly, the stronger your footing, and the more confidently you can speak to how you actually work.

A quick word on super

Of everything on a nervous client’s mind, super is usually the loudest, because getting it wrong can land a back-payment bill with their name on it.

Either way, keep things clear without you making any call about their obligations or falling into the trap of providing them with advice.

When tightening isn’t the whole answer

Sometimes you can do everything in Path A and the question still doesn’t fully settle. Maybe the client stays uneasy no matter how clean the relationship looks. Maybe they come back with something more specific: “Could you invoice us through a company?” Or maybe, if you’re honest with yourself, the work really does look and feel more like employment than a contract.

That’s the cue to look at the next lever: how your business is set up.

The company question is worth understanding, because it’s a question clients raise so often. There’s a real reason a client might prefer you operate through a company, and it ties straight back to that super and employment worry from earlier. It genuinely changes the picture, though not always in the way people assume, and the tax side has a catch or two worth knowing before you race off and register one. That’s exactly where we hand over to Casey in a moment.

But first, let’s talk contracts.

The legal view, from Riz McDonald at Foundd Legal

When it comes to the contract side of all this, we didn’t want to hand you our best guess. We wanted a real lawyer’s answer. So we called in someone we point VAs to all the time: Riz McDonald, the lawyer behind Foundd Legal.

If you haven’t come across her yet, Riz is the rare sort of lawyer who actually writes for people like us. Foundd Legal has agreement templates specifically built for VAs and OBMs, not pulled from a generic business kit, and Riz has a real knack for taking the scary-sounding legal stuff and putting it in plain English. She’s no stranger around here, plenty of you are already running your businesses on her templates, and she’s exactly who we’d want in your corner for a question like this.

So, to help paint the full picture, we put three specific contract questions to her, the ones sitting right underneath your original question.

Here’s what Riz had to say:

We asked: “My contract says I’m an independent contractor, not an employee. Doesn’t that settle it?”

Riz said: It helps, but it doesn’t settle it on its own. A clause stating you’re a contractor is useful evidence of what both parties intended, and I’d always want it in there. But a court or the ATO looks at how the relationship actually works, not just the label on it. If the day-to-day looks like employment, the words “independent contractor” won’t override that. Think of the clause as describing the relationship you’ve genuinely built, not a shield that excuses one that doesn’t stack up.

We asked: “With all the recent changes, do I need to update my client agreement?”

Riz said: It’s a good moment to review it. The rules shifted in 2024, and the way the law now weighs these relationships means an agreement written a few years ago may not reflect where things have landed. A current agreement should make the contracting relationship clear in both its words and its substance, set out who carries what, and be the kind of document you’d be comfortable handing to a cautious client. If yours hasn’t had a look since before the changes, it’s worth fresh eyes.

We asked: “I want the option to bring in another VA to help. What do I need in place?”

Riz said: Two things. First, your client agreement should expressly allow you to delegate or bring in others to help deliver. Second, when you do bring someone in, put a proper agreement in place between the two of you (our Subcontractor Agreement Template is built for exactly that), so responsibility, payment, and IP all stay clean. And a bonus worth knowing: genuinely having and using that right to delegate is itself strong evidence pointing away from employee status. An employee can’t send someone else to do their job. A business can.

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Path B: Review your structure

How your business is set up is the second lever, and it’s a bigger one than it first looks. You’ve broadly got three options: sole trader, company, or trust.

A lot of VAs start out as sole traders, and for good reason. It’s the simplest and cheapest way to run a business: you and the business are essentially one and the same, your income is your income, and there’s very little admin. For plenty of VAs it stays exactly right, for years.

A company is a separate legal entity that you own and run. It costs more to set up and maintain, there’s more paperwork, and there are director duties to take seriously. But it changes a couple of things that matter here. Because the company is its own legal entity, your client deals with the company rather than with you personally, and that reshapes the employee-or-contractor question in a way Casey unpacks below. A company can also put a layer between your business and your personal assets.

A trust is a third option. It has genuine uses, but it’s more complex again, and like the choice between all of these, it belongs with your accountant, not a blog post. So we’ll leave it named and park it there.

So how do you choose? The honest answer is that this is a real decision with trade-offs, and it’s one to make with a registered accountant who can look at your actual numbers, not off a checklist. But a few things genuinely move the needle, and they’re worth a think before you book that chat:

• What other income you have. Your structure interacts with the rest of your tax picture, so what’s right for someone with a full-time job plus a side VA gig can be wrong for someone going all in.
• Whether your clients will actually want it. If a client would prefer you operate through a company, that demand is a real factor, not a vanity one.
• How much risk you carry and what assets you’re protecting. The higher the stakes in your work, the more that liability layer matters.

And one thing a company usually is not, at least not automatically: a tax saving. There’s a catch that trips up plenty of VAs who set one up expecting a smaller tax bill, and it’s important enough to get its own section. That’s next.

The catch: a company isn’t an automatic tax win

Here’s the trap. A VA hears “operate through a company”, pictures the lower company tax rate, and assumes a company means a smaller tax bill.

It often doesn’t. A set of tax rules (personal services income, or PSI) can mean a company makes very little difference to what you pay, especially when your income is really coming from your own effort and leaning on one main client. Casey explains how that works just below, so we won’t pre-empt her.

The takeaway worth holding onto: setting up a company just to keep one nervous client happy can leave you with all the cost and admin and none of the saving you pictured. Often the better answer isn’t a clever structure at all, it’s a second client.

None of this means a company is a bad idea. For the right VA, with the right mix of work, it’s exactly the right move. It just means a company is a decision to make for the right reasons, with someone who can run your actual numbers, not a reflex because a client got nervous.

The tax view, from Casey McQuillan at Bullet Business Services

The legal side is one half of the structure picture. The tax side is the other, and for that we went to someone who lives and breathes it: Casey McQuillan of Bullet Business Services.

Casey is a registered accountant who actually gets the VA world, which is rarer than it should be. She’s put together a whole training for our members on this exact topic, From Setup to Tax Time: Smart Structuring for Your VA Business, and she has a gift for making the tax stuff make sense without the glaze-over.

So we asked her the structuring questions that come up again and again.

We asked: “For a VA whose client is nervous about all this, what’s the single biggest thing operating through a company actually changes?”

Casey said: The cleanest way to put it is this: if you’re operating through a company, you can’t be an employee of your customer. A company can’t be someone’s employee, only a person can. So the moment your client is contracting with your company rather than with you personally, that whole “should we really be putting her on as staff?” worry largely falls away. That’s the genuine appeal, and it’s a fair one. Just go in understanding that it solves a relationship question, not automatically a tax one.

We asked: “How does someone actually know whether sole trader or company is right for them?”

Casey said: There’s no one-size answer, and anyone who gives you a blanket “always go company” hasn’t looked at your situation. A few things matter more than the rest: what other income you’ve got coming in, whether your clients are going to insist on a company, and whether you’re in a higher-risk line of work where you want some asset protection. If you’re earning a modest amount as a sole trader and it’s working, there’s often no rush. The right structure is the one that fits where you actually are, not where you think you should be.

We asked: “If a VA moves to a company to keep a client happy, do they automatically get the 25% company tax rate?”

Casey said: No, and this is the one I wish more people knew before they set up. There are personal services income rules designed to stop exactly that. If your income is really coming from your own personal effort, and especially if the bulk of it is from one client, the tax office can treat that income as yours personally regardless of the company. So you can end up with all the cost and admin of a company and none of the tax benefit you were picturing. It’s not a reason to avoid a company, it’s a reason to get advice first.

We asked: “What if a client says they won’t work with me unless I operate through a company? Do I just have to do it?”

Casey said: You don’t have to, but you can, and if you do, go in with your eyes open. First, remember the PSI point above: if the work is really your own effort and mostly for this one client, a company probably won’t save you a cent in tax. So this isn’t a tax win for you, it’s about the client. Most of the time, when a client pushes for a company, it’s because it takes their risk away, no super, no leave, no employment question hanging over them. That’s a genuine value you’re handing them, and it’s completely fair to be paid for it.

So have the conversation, calmly and without apology. Something like: “I’m happy to set up a company for this. I know part of the appeal for you is the super and leave side, and that’s fair. However, it does add real cost and admin to mine, a company tax return each year, higher accounting fees, and the setup itself. So I’d ask that either you cover the setup cost, or we adjust my rate to reflect it.” To give you a rough sense of the numbers, at the time this post is published (you should confirm fees yourself), a company setup can run around $600, plus roughly $100 to $200 in legal fees, and up to about $1,000 all in if you have someone handle the lot for you. It’s not trivial.

And there’s a simpler option worth putting on the table to discuss with your accountant first: if the real worry is super, you can stay a sole trader and just have them pay super on top of your fee. Same peace of mind for them, far less cost and admin for you. Either way, the point holds: you’re allowed to be compensated for taking something off their plate, and you’re allowed to ask.

We asked: “For a VA who realises they need a proper conversation with an accountant, what should they look for, and what should they avoid?”

Casey said: First, make sure they’re actually registered, check the Tax Practitioners Board register, it’s public and it takes two minutes. Beyond that, walk away from anyone who promises you a specific tax saving before they’ve seen your numbers, anyone pushing one structure for everybody, and anyone who can’t explain why in plain English. A good accountant asks more questions than they answer at the start. You want someone genuinely curious about your business, not someone selling you a template.

One note for transparency: Casey and Bullet Business Services aren’t paid partners of ours, and there’s no commercial arrangement behind featuring her here. She’s included purely because she knows this inside out and shares it generously.

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Path C: Remote employment as part of your mix

Here’s the path nobody expects us to offer, and it’s an important one.

Sometimes you do the honest audit from Path A, you weigh up the structure question in Path B, and the quiet truth is this: for this particular client, the work really does look and feel like employment. Set hours, their systems, their direction, no real ability to send someone else. If that’s the case, the cleanest answer might not be to dress it up as contracting at all. It might be to let it be what it is: employment.

And before anyone flinches, no, that is not a step backwards.

At the Virtual Assistant Lead Network, we see remote employment as a peer option, one legitimate way to earn alongside the others, not a consolation prize. Plenty of our members run a mixed setup without blinking: a contractor arrangement with one client, an ongoing retainer with another, and a part-time remote-employee role in the middle of it all. People move between these modes as their business, their season of life, and their bills require. There’s no hierarchy here. A good remote role with proper pay, leave, and super can be exactly the right call for one slice of your week, while you run your own contracting business for the rest.

Letting an employment-shaped engagement actually be employment also does something useful: it dissolves the whole classification worry for that engagement, at the root. No markers to defend, no nervous client, no super trapdoor. Just a clear arrangement that suits you both. And it costs you nothing of your business. You keep your ABN, your other clients, your brand, all of it.

If a role like that appeals, you don’t have to go looking elsewhere. The bulk of the briefs in our Lead Reports are ongoing contractor work, but every so often a VA Seeker posts a remote-employee role instead, and when one comes up, it sits on the same listings board our members already have access to.

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And while we’re here: protect yourself too

It’s worth stepping back for a second to ask why all of this is happening in the first place. Because it’s easy to read a wave of new rules as the system coming after you. It isn’t.

Strip it back, and these changes are really about one thing: making sure people who work for a living actually get looked after. Fair pay. Super. Basic protections. And that net is cast around genuine contractors too, not just employees. The point was never to catch you out. It was to stop people being quietly done out of what they’re owed.

Which is worth turning around on yourself. Because here’s the slightly uncomfortable question: as well as keeping your clients on the right side of all this, are you looking after you?

It’s a question a lot of us dodge, so consider your specific situation, and flag what you need with your personal professional advisers:

• Are you charging enough to actually live on? Not your headline rate, your real one, after software, insurance, super, tax, and the unpaid hours. If the honest answer is no, that’s the thing to fix first, ahead of any clause or company. (Price, Price Baby and the Rates Report are a good place to start.)
• Are you putting super aside for yourself? A client paying it is one thing, but if you’re a sole trader, nobody’s doing it for you. Future-you will be very glad you started.
• Have you got the right insurance? The same professional indemnity cover that lets you carry your own risk back in Path A is part of protecting yourself, not just reassuring a client. (More in our insurance post.)
• Are you leaning too hard on one client? We saw this in the PSI catch, and it isn’t only a tax point. One client paying the bulk of your income is a risk to your livelihood as much as your classification. A second client protects your income and your standing at the same time.

The rules are, at their core, on the side of people who do honest work. Your strongest position is simply to be one of them: properly set up, properly paid, properly protected. Do that, and a nervous client or a changing law holds very little fear.

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So, where does this leave you?

So, back to where we started. You asked for a bulletproof addition to your contract, one line that would put your clients at ease and let you both get on with the work. We couldn’t hand you one, because it doesn’t exist. What you’ve got instead is more useful: three real ways to put your setup on solid ground, and a clear head about which one fits.

If Path A is your starting point, a solid client agreement is the place to begin, and you don’t have to build one from scratch. Foundd Legal has a client agreement template for VAs and OBMs designed for exactly this, plus an Essential Legal Kit for VAs and OBMs if you want the fuller set. Get 15% off with the code THOUGHTPENNY at checkout.

(A quick, honest note: that’s an affiliate link, so we earn a small commission if you buy through it. We point you to Foundd Legal because we genuinely rate their templates, not for the commission, and what we do earn helps keep our membership affordable.)

Not a member yet? Working through exactly this sort of thing, together, is a lot of what we’re here for. Come and join us.

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Current as at July 2026